Softbank, Fortum, Engie Lose 700 Megawatt Solar Tender In India Due To High Tariff Bids

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The Indian state of Gujarat has canceled yet another solar power tender after finding the tariff bids to be too high according to recent trends. This is the second such tender that has been canceled in Gujarat after bidding was complete.

Gujarat Urja Vikas Nigam Limited (GUVNL) recently told media outlets that it has decided to cancel the tender for allocation of 700 megawatts of solar power capacity in the state as the tariff bids quoted by project developers were too high. 

The tender is question was floated in October 2018, and had offered 700 megawatts of capacity at the Raghanesda Solar Park, located in Banaskantha district. The tender was over-subscribed with total technical bids being submitted for 1.75 gigawatts. In the end, three foreign companies managed to bag the entire 700 megawatt capacity between them. Softbank-backed SB Energy and Finland’s Fortum Energy won 250 megawatts of capacity each, while French utility Engie won 200 megawatts.

The winning tariff bids were quoted in the range of Rs 2.84/kWh (4.08¢/kWh) and Rs 2.89/kWh (4.15¢/kWh). This is substantially higher than the lowest tariff bid seen in the last tender in September 2018. Gujarat auctioned 500 megawatts of capacity in September 2018 at tariff bids between Rs 2.44/kWh (3.44¢/kWh) to 2.45/kWh (3.45¢/kWh).

According to media reports, the foreign bidders blamed the higher charges applicable at Raghanesda Solar Park for the higher bids. The government is expected to reduce those bids, and possible re-tender the capacity.

Early last year Gujarat had canceled an auction of 500 megawatts of capacity citing the same reason. The tariff bids placed by developers in that tender were between Rs 2.98/kWh (4.20¢/kWh) and Rs 3.06/kWh (4.31¢/kWh).

Last year the Solar Energy Corporation of India (SECI) also cancelled allocation of 2.4 gigawatts out of a 3 gigawatt solar power tender. It was India’s largest solar power tender ever issued. Interestingly, SB Energy lost 1.1 gigawatt capacity in that tender, and has now lost 250 megawatts for the same reason. The Gujarat 700 megawatt tender was the first state-level tender in which SB Energy had participated.

Gujarat has launched another tender for 500 megawatts this month.

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An avid follower of latest developments in the Indian renewable energy sector.

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